Data issues in general equilibrium modelling

In recent years global general equilibrium (GE) models have been used to analyse policy issues such as trade liberalisation, regional integration and environmental policies. While a global CGE model is an excellent tool to perform a comprehensive analysis of such policies, it requires an enormous amount of data to calibrate or parameterise the model itself. Quality differences in the data sets might affect the results of the model simulation. Identifying and removing problems in the database is an important task for the effective use of a CGE model. In this paper, we suggest an approach to detect and remove major inconsistencies from the database of a CGE model. To illustrate, we examine and modify selected interindustry transactions in the GTAP version 5 database, a general equilibrium database of the global economy. The revised database was evaluated against the original by undertaking technical change and trade liberalisation experiments using Global Trade Analysis Project (GTAP) model. Results show that estimates using the modified database are more credible than those from the original database.

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 Record created 2017-04-01, last modified 2017-04-26

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